The objectives of this report are 1) to examine Taiwan's outward investment in East & South-East Asia (China & ASEAN) in terms of its motivation & performance, 2) to evaluate its impact on Taiwan and host countries, and 3) to provide foreign investors an overall assessment of the investment climate of the countries in East & South-East Asia in light of Taiwanese investors' experiences in this region. The target audience of this report include academics interested in the development of Asia, policy makers in both host countries and in Taiwan, and business community. To meet these objectives, secondary data from government publications, economic & business journals.etc have been used for analysis. Majority of information is from Taiwanese publication in Chinese language. The methodology of both qualitative & quantitative description is adopted in this report.
Taiwanese have become the second largest investors in East & South-East Asian countries after Japan since the early 1990s. The rapid growth of Taiwan's FDI in this region is mainly due to the changes of Taiwan's internal environment (like increased cost of production), external environment (like rapid appreciation of Taiwanese dollar), and government policy (like liberalization of Taiwanese outward investment & foreign exchange). China is the most popular destination of Taiwan's investment and Taiwan has become the third largest investors in China since 1991, after Hong Kong, US. Such movement of Taiwan's FDI in China is due to cheap cost of production, cultural & geographical affinity. Yet, there is high political risk in Taiwan's FDI to China. In contrast, ASEAN has less political risk as compared to China for Taiwanese investors. Taiwan has been ranked at the largest foreign investor in Malaysia & Indonesia, followed by Japan, and the second largest investor in Thailand & Philippines after Japan since the early 1990s. In a comparison of investment climate for Taiwanese investors, Malaysia has the best and Philippines has the worst investment environment among ASEAN. On the other hand, Taiwanese MNCs are similar to Japanese MNCs in terms of motivation for investment, but Japan's FDI are in both resource and manufacturing, while Taiwan's FDI has focused on the manufacturing sectors. Also, Japanese MNCs prefer joint venture, while Taiwanese MNCs are in favour of fully-owned equity investment. The impact of Taiwan's FDI on host countries reveals more positive effects on their trade, employment creation...etc. However, the overall impacts of Taiwan's FDI on home country is uncertain, since outward investment would achieve international division of labour for Taiwanese enterprises. At the same time, it also brings competition to Taiwan's domestic market as well as international export markets. Nevertheless, if Taiwan's government and enterprises can accelerate upgrading their industries to produce higher value-added products with high quality, then they will be more competitive in international markets. In this way, the effects of Taiwan's outward investment would be positive to nation's economy in achieving industrial restructuring and avoid a danger of de-industrialisation. Furthermore, an integrated & planned investment strategy and strategic alliance with other nations' MNCs will emerge as a new form of Taiwan's outward investment in future.